The Future Of NATO: Four Scenarios For The Coming Decade

Key View: The NATO alliance is likely to remain intact with only minor expansion over the coming decade, as bureaucratic inertia prevents a dramatic reconfiguration of the organisation. Nonetheless, NATO faces downside risks to its cohesion and effectiveness, owing to diverging threat perceptions of its member states, and low levels of defence spending, which will be constrained by Europe’s ageing populations.

The NATO alliance will continue to come under strains over the coming five to 10 years, as the US Trump administration pressures its European allies to raise defence spending to reduce the economic burden on the US, while European nations struggle to meet these demands as their populations age, which will place greater emphasis on health and welfare expenditures. At the same time, diverging threat perceptions between Eastern European members more concerned about Russian assertiveness and Southern European members more concerned about instability and migrant flows from the Middle East and North Africa will undermine the cohesion of NATO. Furthermore, Turkey’s uncertain direction under President Recep Tayyip Erdogan raises the risk of greater strains between the alliance and Ankara, and we cannot preclude that Turkey will eventually be marginalised from NATO or leave the alliance. The overall result will be a military alliance that could become increasingly moribund, even if it takes in a few new members. That said, bureaucratic inertia will prevent a dissolution or dramatic reconfiguration of NATO.

NATO Strains Not New, But Getting Worse

The tensions within NATO are by no means new, but appear to be becoming more pronounced. NATO was founded in 1949 as a collective defence alliance to protect Western European nations and the wider North Atlantic area from a Soviet attack. It also served as an integrator of Western Europe in the aftermath of World War II. NATO has been in search of a ‘new mission’ ever since the end of the Cold War in 1989-1991, when the USSR and NATO’s rival organisation, the Warsaw Pact, were dissolved (see ‘The Future Of NATO: Fundamental Questions', April 3 2009). The alliance found a new purpose in the 1990s, when it intervened against Serbian military forces in Bosnia in 1995 and Kosovo in 1999, deploying massive peacekeeping forces in both countries once the conflicts were over. However, tensions emerged in the early 1990s between the US and its European allies over how best to intervene in the former Yugoslavia, with the US expressing frustrations over how much of the troop deployment and financial burdens fell on its shoulders.

Despite these disagreements, NATO still underwent a massive expansion into Central and Eastern Europe in 1999 and 2004, taking in virtually every country that had been under Soviet dominance during the Cold War. NATO largely ignored Russian objections, because Moscow was too geopolitically weak after an economic lost decade following the collapse of the Soviet Union to prevent the alliance from expanding.

The years since 2000 have also brought NATO more strains. The US eschewed NATO during the invasions of Afghanistan (2001) and Iraq (2003) and its aftermath, instead relying on more flexible and less restrictive ‘coalitions of the willing’, which included the UK, Australia, and a few other countries. The US also expressed frustration with its European allies during the NATO intervention in Libya in 2011, with Washington complaining that European nations’ low levels of defence spending had left them ill-equipped to fight conflicts even on their doorstep. This led the then-US Secretary of Defense, Robert Gates, to warn of NATO’s possible irrelevance.

A Highly Uneven Pattern

NATO Defence Spending In 2018 (% of GDP)

Source: NATO estimates, Fitch Solutions

Despite these tensions, NATO played a key role in attempting to stabilise Afghanistan in the early 2010s, with European nations contributing 50,000 troops to the US’s 100,000-strong presence there. Even so, the conflict remains a stalemate, and Western combat troops were mostly removed by 2015.

Russia’s brief invasion of Georgia in August 2008, and especially its interventions in Ukraine since 2014, have to some degree repurposed NATO as an organisation once again designed to counter Russian expansionism in Europe. However, Southern European nations and some Western European ones are more likely to be concerned about instability in the Middle East and North Africa, and the need to counteract Islamist terrorism and migrant flows.

Donald Trump’s ascent to the US presidency in 2017 has exacerbated Trans-Atlantic strains, for he has emerged as by far the most critical American leader of European allies, and by far the most sympathetic to Russia. He is also the first US president to adopt a seemingly ‘transactional’ attitude to US defence commitments, and to publicly warn that those commitments may not be honoured.

Limited Scope For Future Expansion

A major question facing NATO is how much further it will or should expand, after taking in Montenegro in 2017 and offering membership to Macedonia in 2018. Several other countries are considered potential members, but Russia would vigorously oppose their inclusion, and potentially undertake dramatic action to prevent their accession.

Stand Off With Russia Set To Continue

Europe's Geopolitical Alignments

Source: Fitch Solutions. Macedonia received NATO invitation in July 2018

Remaining ex-Yugoslav states: Bosnia-Herzegovina, Serbia, and Kosovo are the last remaining former Yugoslav states not to have joined NATO. Serbia has eschewed membership in favour of military neutrality, and is carefully balancing itself geopolitically between Russia and the West. Meanwhile, any attempt by Bosnia to join NATO is likely to be blocked by Bosnia’s Serbs, who comprise more than 30% of the country’s population and who can rely on the support of either Serbia or Russia. For Bosnia or Serbia to join NATO would require a major political shift in Banja Luka and Belgrade, which is unlikely in the near term, but not impossible. For its part, Kosovo has a strong pro-Western stance, and effectively already has a NATO security guarantee through the presence of NATO forces there since 1999.

Georgia, Ukraine, and Moldova: Georgia has been seeking NATO membership since 1999, a stance that partly prompted Russia to briefly invade it in August 2008. The Russian invasion resulted in the secession of Abkhazia and South Ossetia from Georgia and Moscow’s recognition of them as sovereign states. Owing to the precarious state of Georgia-Russia relations, NATO has been very reluctant to invite Georgia to join it, and we believe that any such invitation could trigger further Russian military action.

Russia has also sought to prevent Ukraine’s accession to NATO, and in early 2014 seized the Crimean Peninsula from Ukraine and began supporting separatist rebels in the eastern part of the country. Unsurprisingly, Russia’s actions have boosted support for NATO membership in Ukraine, with a July 2018 poll showing a plurality (45%) in favour, but it is unclear if this would be sufficient to win in a referendum. Regardless, the stand-off with Russia has made NATO reluctant to invite Ukraine, for fear of being dragged into a full-scale conflict. Meanwhile, Moldova is unlikely to be able to reach a national consensus on NATO membership, as the country is finely divided between pro-Western and pro-Russian political forces, even excluding the separatist pro-Russian region of Transnistria.

Overall, we believe that Georgia, Ukraine and Moldova will remain outside NATO for the foreseeable future. They are only likely to be invited to join NATO in the event of a catastrophic weakening of the Russian Federation, comparable to the lost decade of the 1990s.

Finland and Sweden: Both have been neutral countries for generations, despite Sweden’s broadly pro-Western alignment and Finland’s accommodation with the USSR (‘Finlandisation’) during the Cold War. Both Sweden and Finland are vital to the security of the Baltic region, and in the wake of the Ukraine crisis in 2014, the issue of NATO membership entered the public discourse. However, opinion polls showed support for NATO accession in Finland at below 25% and in Sweden at below 35%, with opposition to membership commanding pluralities or majorities. In our view, neither Finland nor Sweden would seek to join the alliance unless the other expressed a clear interest first.

Any attempt by Finland or Sweden to join NATO would be viewed as a grave threat by Russia. Finland’s membership would mean a massive expansion of the shared frontier between Russia and NATO, while Sweden’s accession in tandem with Finland would transform the entire Baltic Sea into a ‘NATO lake’, greatly challenging Russia’s power projection abilities in the region.

Overall, we believe that Finland and Sweden will avoid joining NATO for fear of further antagonising Russia. However, both will retain and possibly strengthen co-operation with the alliance.

NATO: A SWOT Analysis

Strengths:

NATO is the world’s most powerful military alliance, comprising the world’s sole superpower – the USA – its biggest and most developed economies, and the most technologically advanced and in some cases best-trained militaries. As a politico-military bloc, it is unrivalled anywhere on Earth. In addition, the USA has a number of designated ‘Major Non-NATO Allies’ which are all pro-Western and have close ties with the US. This gives NATO additional strategic strength.

NATO also has almost seven decades of institutional experience, including co-ordinated military planning and organisation, and defence industrial cooperation. It also has a proven track record of waging combat in the Balkans, Afghanistan, and Libya, and combatting piracy off the coast of Somalia.

Weaknesses:

The alliance’s strength is disproportionately reliant on the US, which accounts for around 70% of its spending. Most European members of NATO are reluctant to raise defence spending to the alliance’s 2% of GDP guidelines.

NATO is mainly geared towards fighting conventional wars, yet military conflicts in the 21st century are increasingly ‘unconventional’, involving insurgencies (in Afghanistan and Iraq) ‘hybrid wars’ (as in the case of Ukraine), or cyberattacks.

Opportunities:

NATO could yet strengthen itself, if more members agreed to spend above the recommended 2% of GDP on defence. NATO could also potentially benefit from increased co-ordination among its European members, so that the alliance becomes less dependent on the USA alone.

Threats:

The expansion of NATO has arguably made the alliance less wieldy and diluted its sense of common threats. The newer Eastern European members are overwhelmingly more concerned about Russia, whereas the Southern European members are more exposed to terrorism threats and refugees from North Africa.

There were question marks about whether NATO would actually honour its Article 5 defence commitments to its allies, even before Donald Trump became US president. A Pew survey of the public in several NATO states published in June 2015 suggested only lukewarm support for defending fellow NATO members in the event of a ‘serious military conflict with Russia’ (see ‘Survey Raises Doubts About NATO's Commitment To Allies’, June 11 2015). However, a similar Pew survey in May 2017 showed a modest increase in support for defending allies against Russia, with the Netherlands (72%), Poland and the US (both 62%) most in favour. Of eight countries surveyed, Germany (40%) and the UK (45%) showed the lowest support. This suggests that in the event of conflict with Russia, NATO would have to respond via a ‘coalition of the willing’ rather than the organisation as a whole.

NATO’s unity is also jeopardised by the Trump administration’s lukewarm attitude to the alliance, and the uncertain direction of Turkey under President Erdogan.

Four Scenarios For NATO, 2018-2028

Status quo ‘minus’ (benign stagnation): NATO fails to undertake any major changes in terms of meeting the 2% of GDP guidelines or placating the US’s critiques of the alliance. This causes the Trump administration or its successor to take an increasingly critical stance towards the group, leaving it marginalised in world politics. Meanwhile, the increasingly divergent security concerns of NATO’s members cause the alliance to become increasingly paralysed in future crises. At the same time, Turkey continues to grow more distant from the alliance, and moves to strengthen ties with Russia and China. NATO continues to exist in its present form, but increasingly comes to resemble a political organisation rather than a military alliance.

Likelihood: This is the most likely scenario, as it maintains the continuity of current trends, which have been in place for many years. It is the path of least resistance for NATO.

Status quo plus (modest strengthening): The alliance expands to take in a few small countries (e.g. Macedonia, Kosovo), while European member states raise defence spending to 2% of GDP in line with alliance guidelines. European members, led by France and Germany in a post-Brexit EU, also step up their own military coordination to make themselves less dependent on the US. This creates a nascent EU military entity within NATO that takes more responsibility for European security. The Trump administration or its successor reaffirms the US’s unqualified commitment to the alliance.

Likelihood: This is the second-most likely scenario, as it represents a modest and realistic improvement from current trends.

Disintegration: NATO, increasingly beset by internal disagreements, eventually disintegrates, as dissatisfied members abandon the alliance in favour of alternatives, one of which could be a rival EU security bloc led by France and Germany. This could prompt the US to withdraw from NATO with the aim of focusing more of its military resources on the Indo-Pacific region, the Middle East, or its own hemisphere. Turkey, increasingly at odds with EU members, could also cut itself loose in favour of closer defence ties with Russia or China, or both via the Shanghai Co-operation Organisation (see ‘NATO Membership Intact, But Long-Term Risks Of Exit Rising, July 29 2016). European defence could fracture along regional lines, with Southern Europe, Eastern Europe, and the Nordic countries forming their own defence organisations.

Likelihood: It is difficult to see a dissolution of NATO in the absence of a major war that results in the alliance’s defeat, or a pyrrhic victory – i.e. a victory that comes at such a high cost in terms of casualties and physical destruction that its members no longer wish to participate in military alliances. For example, NATO could be rendered defunct if it failed to defend the Baltic States from a Russian invasion or mass destabilisation effort (see ‘Baltic War Scenarios: What If Russia Intervenes?’, March 5 2015), or ‘wins’ amid a limited nuclear exchange. In the post-World War II era, there are three precedents for the dissolution of a major military alliance. In 1977, the Southeast Asia Treaty Organisation (SEATO), which was designed to prevent the spread of communism in its region, was dissolved after the defeat of South Vietnam by the North in 1975, although it had already been declining as an organisation for several years before then. In 1979, the Central Treaty Organisation (CENTO, comprising the UK, Turkey, Iran and Pakistan) was dissolved after its geographically central member, Iran, was convulsed by an anti-Western revolution. However, neither SEATO nor CENTO was as developed and integrated as NATO. A better analogy took place in 1991, when the Warsaw Pact (the USSR-backed Eastern European equivalent of NATO) disintegrated after the collapse of communism and the break-up of the USSR.

Super Expansion: A final possibility is that NATO expands dramatically to take in Western-aligned countries such as Japan, South Korea, Israel, Egypt, and several others to form a new global security organisation, an idea that was expressed by some foreign policy opinion-makers in the 2000s. Alternatively, NATO could admit Russia as part of a new ‘grand bargain’ to form a ‘Greater European’ Vancouver-Vladivostok security bloc spanning most of the northern hemisphere (see ‘Two Radical Long-Term 'Solutions' To End The Russia-West Stand-Off’, June 25 2015). The USSR itself proposed joining NATO in 1954, and in 2009 the then Polish foreign minister, Radek Sikorski, appeared open to the notion of Russian membership at a future date, despite his hardline views towards Moscow.

Likelihood: There is very little impetus to expand the NATO on such a global scale. To do so would make the alliance’s interests too diverse, thereby diluting its sense of unity. Moreover, it seems extremely unlikely that we will see changes in Europe that would facilitate the admission of Russia into NATO, even if President Vladimir Putin were succeeded by a more Western-friendly leader. For Russia to even seek to join NATO, its relationship with China would have to come under extreme pressure to the point of open geopolitical rivalry or the brink of war, and the West would need to feel the need to enlist Russia as a counterweight to China. This would probably need to be preceded by a shooting war – or moves towards one – by the US and China.

The USSR's detonation of its first atomic bomb and the outbreak of the Korean War (1950-1953) heighten Western concerns about Communist expansion worldwide

1952

NATO admits Greece and Turkey

1955

NATO admits West Germany

1955

The USSR and its allies form the Warsaw Pact as a rival to NATO

1956

The USSR invades Hungary to prevent it from leaving its sphere of influence

1961

The Berlin Crisis results in the construction of the Berlin Wall, dividing the city until 1989

1966

France withdraws from NATO's integrated command structure, citing US dominance of the alliance

1968

The USSR invades Czechoslovakia to prevent it from leaving its sphere of influence

1968

Albania withdraws from the Warsaw Pact and aligns with China

1974

Turkey invades northern Cyprus, leading to long-term tensions with Greece and later the EU

1975

The Helsinki Final Act is signed by European nations, which recognises the inviolability of borders and the sovereignty of staes

1979

The USSR deploys new SS20 ballistic missiles in Europe, prompting the US to deploy Pershing II missiles in 1983

1982

NATO admits Spain, following its transition to democracy

1981

Poland declares Martial Law to crack down on anti-Communist activities; the new US Reagan administration later provides covert support to anti-Communist elements

1983

NATO stages the massive Able Archer military exercise, which the USSR interprets as preparations for invasion

1985

Mikhail Gorbachev becomes the Soviet leader, presaging a major easing of Cold War tensions

1989

Most Communist regimes in Eastern Europe collapse, and are replaced by pro-Western governments

1990

Germany is formally reunified, bringing the former East Germany into NATO

1990

NATO and Warsaw Pact nations sign the Conventional Forces in Europe (CFE) treaty, which limits the deployment of military hardware in Europe

1991

The USSR and Warsaw Pact are dissolved, and the USSR withdraws its troops from Eastern Europe

1991-1994

Full-scale fighting takes place between Armenia and Azerbaijan over Nagorno-Karabakh, resulting in Armenia's victory

1992

Yugoslavia disintegrates, resulting in civil war in Bosnia; NATO begins enforcement of a no-fly zone and provides support for UN peacekeepers, carrying out limited strikes against Bosnian Serb forces in 1994

1992

Moldova's region of Transnistria becomes de facto independent, with Russian support

1994

NATO establishes the Partnership for Peace programme including Russia and former Soviet republics

1994

Ukraine gives up its nuclear weapons, which were inherited from the USSR

1994-1996

Russia's military is severely weakened after an unsuccessful war to prevent the de facto secession of Chechnya

1995

NATO conducts air strikes against the Bosnian Serbs, which, in tandem with Croatian and Bosnian ground offensives, force the Serbs to sign a peace agreement; NATO deploys a 60,000-strong peacekeeping force in Bosnia